Vincent Carroll

Carroll: Lyft and uberX are latest threat to taxi oligopoly

Uber Black is an app-based limo service that got the green light last year to serve metro Denver after a major legal brawl, writes Vincent Carroll. (AAron Ontiveroz, The Denver Post)

"If the legislature doesn't pass a bill, make no mistake about it, we're going to be forced to put these guys out of business," declares Doug Dean, the executive director of the Colorado Public Utilities Commission.

By "these guys," Dean means Lyft and uberX, which entered the Denver market last year with on-demand, low-cost rides that passengers summon through a smartphone app. In another twist, drivers use their personal vehicles.

Don't confuse uberX with Uber Black. The company is the same, but Uber Black is an app-based limo service that got the green light last year to serve metro Denver after a major legal brawl. Now the PUC must deal with yet another disruptive, innovative and popular transportation model hatched on the West Coast that regulators never saw coming.

This time, though, the upstarts can't bank on the PUC retreating under pressure. Instead, they'll have to persuade lawmakers to change the rules.

Of course, there's a catch in going that route.

"I assume the taxi industry is going to oppose any legislation that would legitimize these guys," Dean told the Denver Post editorial board.

Oh, will they ever. And the taxi industry has an excellent record at beating back legislation that threatens its oligopoly advantages. If the political dynamic is slightly different this time, it's only because Lyft and uberX can cite markets that have embraced them and because they're the darlings of transportation theorists who see the present regulatory model as hopelessly ill-suited to the 21st century.

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"If you could wipe the slate clean," explains Slate's Matthew Yglesias, "and make cabs and cab-like service cheaper and more broadly available" — as Lyft and uberX clearly do — "then you could imagine many more middle-class people relying on Ubers and Zipcars for when they really need a car, while walking, biking or riding transit the rest of the time."

Lyft president John Zimmer put it to me this way: If you could boost the average number of people in cars from 1.1 to, say, 1.3 or so, he says, you'd essentially eliminate congestion. And if you did this with cars that people already own, you'd save consumers money, help the environment, and even create community.

Starry-eyed? Of course, but if you spend an hour with Zimmer, you realize he means it.

Still, sincerity gets you nowhere in politics. The cab companies and status-quo lobbyists will bleat about how only the existing rules on insurance, background checks, inspections, vehicle age, fares and fleet size protect the public, as if they had been chiseled on tablets. California obviously disagrees, since last year it created a new category of "Transportation Network Companies" that allows Lyft and others to thrive without a significant shift in operations.

If you want to know who the current regulatory scheme serves — passengers or the cab firms — consider that during discussions over possible legislation, Dean says he floated the idea of freeing cab companies from rate regulation. The reaction? According to Dean, one big cab company said, "We're not so sure that's a great thing, either."

Rate competition is the last thing the big boys want — unless it's someone meddling with their lease agreements. And yet Dean foresees "significant change to the incumbent taxi companies" if lawmakers follow California's lead because cab drivers now may pay $500 a week in leasing fees. "For $2,000 a month, you can buy a pretty darn nice car, and then you go to work for Lyft and only give them 20 percent of your fares," he explained.

So let's see: The Lyft/Uber model is cheaper for passengers and maybe a better deal for some drivers, too. It's going to be fun hearing the cab lobbyists explain why that's so awful.

E-mail Vincent Carroll at vcarroll@denverpost.com. Follow him on Twitter @vcarrollDP

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